More Embarq/CenturyTel details emerge

In a Friday filing with the SEC, Embarq provided additional details about its decision to merge with CenturyTel in an $11.6 billion all-stock deal that includes assumption of $5.8 billion in Embarq debt.

Embarq released the info to help settle a shareholder lawsuit complaining that Embarq directors didn't get the best offer for the company.

Among their peers, only Embarq and CenturyTel were "investment grade" companies so a deal merging the two would result in an entity with a stronger balance sheet "better positioned to participate in further industry consolidation."

Among other tidbits that emerged: The deals came down to two bidders, CenturyTel and "Company A," which might have been Frontier. CenturyTel offered a 36 percent premium. Company A initially made an unsolicited proposal to buy Embarq for 25 percent cash and 75 percent stock, while CenturyTel first put an offer on the table of 35 to 40 percent cash and 60 to 65 percent stock.

Another round of proposals were submitted later in October. Company A offered Embarq fewer seats on the board and didn't offer a non-executive chairman from the former Embarq directors.

Ultimately, the board thought CenturyTel offered more potential synergies, and its strong balance sheet was expected to make the regulatory process go faster. Adding in projected operating results, net cash flows and expected synergies resulted in CenturyTel's proposal being 10 percent more valuable, according to the company.

For more:
- More details out of the Embarq sale by the KC Business Journal. Article.

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